You need to defeat Helina in an arena. After you defeat the boss in the Scared Arena (Area 2), go west and find Helina's Arena. Note you need to have the following prerequisites or Helina will not fight:

After defeating the boss in Scared Arena 2, head north and fight Katia. Defeat her and an option saying, "Do you want to take on Katia's responsibilities?" Selecting yes will download your card collection from the 1st game (from your Lost Kingdom save file) and add it to your LK2 save. *** You can only download your LK1 card collection to your LK2 save once, and at this point in the game. Saving afterwards will unlock Katia.